NACD: Keeping up with compliance

As regulatory agencies increase enforcement actions against chemical distributors, the NACD is helping members highlight their commitment to environment, health, safety and security

Several factors contribute to increased regulatory enforcement, which is having a real impact on chemical distributors. The slowing of the economy in 2008 led to reduced revenues shortly after several perceived regulatory failures - in food and product safety, airline maintenance, and the financial system. The installation of a democratic administration also led to more government involvement and a philosophy that businesses must be policed, according to Jennifer Gibson, vice president of Regulatory Affairs for the NACD. More recently, there has been political gridlock in Washington and little movement on new legislation.

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The result: regulatory agencies are increasing enforcement activities. "The situation is particularly challenging for chemical distributors," says Gibson. "The scope of regulatory requirements with which chemical distributors must comply is formidable: environmental, transportation (including hazardous materials), security, health and safety and, depending on their business model, import and export requirements. In addition, most chemical distributors are very small businesses with limited resources, so it can be a challenge to stay on top of all of the regulatory requirements because of their number, complexity and frequent changes."

The average NACD member achieves approximately $28m (€22m) in sales, has 24 employees and operates through one or two locations. Brown Chemical Company, which is a good example, has to comply with the regulations of multiple federal agencies, plus state and local regulations, the number of which is also growing. "It is very difficult for a small company like ours to stay on top of all of these requirements without external assistance. We simply do not have the internal resources," says president Doug Brown.

The complexity and vagueness of many regulations compounds the issue, and often places businesses at the mercy of inspector opinions on any given day. A prime example is the US Environmental Protection Agency's (EPA) recent activity on the Clean Air Act's General Duty Clause (GDC).

The GDC requires companies with regulated chemicals and other extremely hazardous substances to manage their chemicals safely, but there is no specific list. "As a result," Gibson explains, "the EPA has tremendous power to require facilities to change their procedures and designs while giving facilities limited recourse to question the agency's allegations."

Brown adds that the GDC gives the EPA lots of opportunity to find problems, and it is not difficult for a company that is committed to operating in an environmentally-responsible way to still find itself receiving a citation. Small companies often cannot afford to fight, because the cost of legal fees, fines and damage to their reputation is more than they can afford.

NEW REQUIREMENTSThe EPA is also using the new Chemical Data Reporting Rule (CDRR) under the Toxic Substances Control Act (TSCA) to increase its focus on chemical management.

"Companies need to be aware that there are additional reporting requirements under the CDRR compared to the Inventory Update Rule (IUR), which it replaced," notes Lynn Bergeson, founding member and managing principal of Bergeson & Campbell, P.C.

Chemical distributors also need to keep up to date with the new interpretations and clarifications from the EPA and other agencies.

"Many of the recent TSCA citations have been based on alleged violations of the IUR and new interpretations of existing TSCA Inventory listings that have been on the TSCA Inventory for a very long time," she notes.

"Chemical substances that have been considered by industry to be covered by certain broad TSCA Inventory listings may no longer be considered by EPA to include those substances. Because businesses are following chemical identification practices that have been used for many years, companies have no reason to believe that EPA may not consider their practices TSCA compliant until EPA audits their facility and raises issues, the resolution of which may result in a citation."

Bergeson's firm has worked to identify such areas of intense ambiguity. She also recommends companies consider taking advantage of EPA-distributed information. For example, all EPA programme offices maintain listserves that enable the EPA to share policy updates and notices of important new rules and guidance documents, which are not always published in the Federal Register.

An example is the EPA's guidance on the scope of the TSCA article exemption issued on 3 August. This arguably modifies and narrows the scope of the article exemption, and was not published in the Federal Register. "If you did not receive the fact sheet through the EPA listserve, it is entirely possible you would not be aware of this important development," she says.

SUPPORT NETWORKBrown thinks membership in NACD is hugely beneficial in terms of helping his company stay up to date on regulatory developments and formulating plans for compliance. "The training, guidance tools, webinars, meetings and other programmes are very helpful," says Brown.

He also finds the networking opportunities that the NACD provides through its various regional and national meetings are invaluable. "Such events create a very non-threatening environment in which we can talk with our peers that are facing the same challenges about what has or has not worked for them in similar situations," he says.

The NACD has shifted more focus and resources to regulatory compliance and advocacy activities. A series of five webinars were held in 2012 for members to focus in-depth on issues such as the Emergency Planning and Community Right to Know Act, Clean Air Act Risk Management Plans, the General Duty Clause, and Product Segregation in the Warehouse.

Gibson also prepared a 13-page Regulatory Checklist - available on the members-only section of its website - listing the major federal regulations that could apply to chemical distributors and providing links for more information.

In addition, the NACD has established a Regulatory Partner Program involving four firms, including Bergeson's, each specialising in a specific area to assist members with regulatory compliance, and continues to seek ways to improve this programme, says Gibson. Furthermore, the association's annual OPSEM Conference and Trade show each August, has become primarily focused on regulatory compliance issues.

REGULATORY SUPPORTOther changes are taking place within the organisation. A new VP for Legislative Affairs will take over responsibility for the NACD's advocacy efforts so that Gibson can devote all her time to regulatory support. The Government Affairs Committee has also become the Government Advocacy Committee and will address legislative and grassroots advocacy activities, while a new Regulatory Affairs Committee will help develop and provide direction on federal regulatory activities and support for regulatory compliance.

Gibson and the NACD have also been working on stronger hard-to-develop relationships with the EPA, Department of Transportation (DOT), Department of Homeland Security (DHS) and the Occupational Safety and Health Administration (OSHA).

"We have a good story to tell with Responsible Distribution. We also want to make clear that we all have the common goals of environmental protection and safe workplaces, communities and highways," she says.

There have been some successes, too, such as in EPA Region I in New England, which has been the most active in regulatory enforcement with a focus on chemical distributors. This past spring, NACD leadership from the US northeast region and NACD government affairs staff met with EPA representatives to learn more about what the agency is looking for with respect to chemical distributors, and to try to understand how the General Duty Clause is currently being interpreted. The EPA provided resources outlining the agency's specific concerns about what has been observed at various facilities, and the NACD has been able to share this valuable information with the entire membership.

On the legislative front, Brown met with the lead proponent in the Senate for TSCA reform and his state senator, Frank Lautenberg (Democrat - New Jersey) several times this summer to understand his proposals and to help explain the potential impacts on chemical distribution of the proposed changes.

Separately, Andrew Skipp, president of Hubbard-Hall Inc and chairman of the NACD board, testified before Congress regarding chemical security legislation - for example, Chemical Facility Anti-Terrorism Standards (CFATS) - and issues that owner-managed business are facing today with respect to regulatory burdens.

"What legislators and regulators need to understand is that, for an owner-manager, the company is his or her greatest asset and greatest liability. Therefore, there is no interest in doing anything that will put the business at risk. What we do want, though, is legislative and regulatory certainty that will maximize the results of our expenditures and lead to increased safety and security for our employees and the community," Skipp says.

The focus for the remainder of 2012 and 2013 will be to enhance and increase the current NACD programmes, including offering more webinars and other educational sessions, improving compliance tools and the Regulatory Partner Program and further emphasising outreach to the regulatory agencies.

One of the main ideas that the NACD is working to impress upon the agencies is that its members are working hard to be safe and to meet compliance requirements.

There is a sense that the NACD is making progress with the agencies, and they are beginning to understand more about the chemical distribution business and the commitment NACD members make to managing Environment, Health, Safety and Security (EHS&S). NACD will keep working with them to demonstrate the industry's commitment, learn about their expectations and keep members informed, says Gibson.

Author: Cynthia Challener

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